Broker News

Affordability drops in Sept quarter

Housing affordability posted a slight decline in the September quarter, but has improved compared to the same quarter last year according to new research.

The latest REIA/Adelaide Bank Housing Affordability Report shows the proportion of income required to meet loan repayments increased by 0.1% to 29.5% in the September quarter, a result that is 2.2% lower than the same quarter in 2015.

“[This is] still at the lower end over the last seven years,” notes REIA president Neville Sanders. “Unfortunately, historically low interest rates were unable to offset the increasing size of mortgages.”

New South Wales and Victoria are the least affordable states, while Northern Territory and the ACT are the most affordable.

The report reveals affordability worsened in New South Wales (from 35.4% to 35.5%), Queensland (from 26.1% to 26.6%), Western Australia (from 22.6% to 22.8%) and Tasmania (from 22.4% to 22.8%).

However, four jurisdictions saw improvements in housing affordability: Victoria (from 31% to 30.9%), South Australia (from 25.4% to 25.2%), the Northern Territory (from 20.9% to 19.6%) and the ACT (from 19.4% to 19.1%).

And in a blow to first homebuyers, this segment of the market fell by 6.7% in the September quarter to 21,825 – which is down 5.8% compared to the same quarter last year.

According to the report, first homebuyers now make up 13.2% of the owner-occupier market, which Sanders highlights is the lowest figure since the ABS series commenced in June 1991 and compares to an average of 18.5% over the period.

“With the average loan sizes continuing to rise REIA is concerned that the proportion may fall even further in the coming quarters,” Sanders adds.

All states and territories saw decreases in the number of first homebuyers over the September quarter 2016, with the exception of Queensland (up by 5.2% to 5,295) and the Northern Territory (up 14.3% to 144).

Other key figures from the report include:

The total number of loans in the September quarter fell by 6.3% to 105,314 – down 5.3% year-on-year.

The average loan size increased by 1.5% to $374,991 – down 1.4% year-on-year.

New South Wales has the largest average loan size across the country ($451,056), which increased 1.6% over the quarter but decreased by 1.2% compared to the September quarter 2015.

In Victoria, the average loan size was $379,981 over the quarter – up 1.3% over the quarter but down by 2.7% compared to the corresponding quarter 2015.

In Queensland, the average loan size increased by 3.1% during the quarter to $328,436 which represents a 1.1% rise compared to the September quarter 2015.

In South Australia, the average loan size went up by 1.1% over the quarter (to $291,077) and also by 0.9% compared to the same time last year.

In Western Australia, the average loan size increased by 1.7% over the quarter (to $343,327) – a 0.3% rise compared to the September quarter of the previous year.

In Tasmania, the average loan size increased by 3.1% over the quarter (to $237,954) and 6.2% compared to the same time last year.

In Northern Territory, the average loan size went down by 5.0% over the quarter and also by 15.8% when compared to the September quarter 2015, to $307,353.

In the ACT, the average loan size decreased by 0.2% over the quarter and is now $378,375 – a 3.9% rise compared to the corresponding quarter 2015.